Re Riviera Group Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (2009) 72 ACSR 352 Stimpson, in the matter of Eagle Boys Dial-A-Pizza Australia Pty Ltd (Administrators Appointed) v Eagle Boys Dial-A-Pizza Australia Pty Ltd

BEACH J: 1 The plaintiffs, Bruno Anthony Secatore and Glenn John Spooner of Cor Cordis, Chartered Accountants, have been the joint and several administrators of In-Fusion Management Pty Ltd (Administrators Appointed) (In-Fusion) since 8 August 2016. They were appointed under s 436C(1) of the Corporations Act 2001 (Cth) (the Act) by Scottish Pacific (BFS) Pty Ltd, a secured creditor under a general security agreement entered into on or around 5 February 2009. Prior to the voluntary administration, In-Fusion had operated a business of providing labour hire services. 2 Under s 439A(5) of the Act, the convening period for the second meeting of In-Fusion's creditors ends on 5 September 2016; under s 439A(2), the plaintiffs must hold the second meeting of creditors by 12 September 2016, the first meeting of In-Fusion's creditors having taken place on 17 August 2016. 3 The plaintiffs have applied under s 439A(6) of the Act to extend the convening period for the second meeting of In-Fusion's creditors for a period of 20 business days. The plaintiffs seek an extension to facilitate the sale of the business of In-Fusion as a going concern. Apparently, the process of selling the business has well progressed, and the sale to a prospective purchaser may be concluded by 3 October 2016. The plaintiffs submitted that they would achieve the highest realisable value of the business if the business was sold as a going concern. They further submitted that if the business ceased to trade, it would lose its casual labour hire force (and consequentially its clients), and it therefore would be difficult to sell the business for any material sum. As such, the plaintiffs have submitted that the extension of time would allow them to sell the business which would benefit inter alia creditors. 4 For the following reasons I would grant the extension sought.

BACKGROUND 5 As I have said, In-Fusion was placed in voluntary administration on 8 August 2016. In-Fusion has unsecured creditors' claims of $2,920,225 and secured creditors' claims of $987,780. On 10 August 2016, the plaintiffs and In-Fusion entered into a Management Deed with KRD HR Pty Ltd (KRD) and In-Fusion's director, Kirk Roland Devers as guarantor, under which, inter alia, KRD would conduct and operate the business. The purpose of the Management Deed was to allow the business to continue to trade whilst In-Fusion was under administration and so that the business could obtain its highest realisable value if and when the business was sold. 6 On 11 August 2016, the plaintiffs arranged for an advertisement to be published in the Australian Financial Review seeking expressions of interest for the purchase of the business. 7 On 12 August 2016, the plaintiffs engaged Slattery Auctions to prepare a valuation of In-Fusion's plant and equipment. On 15 August 2016, Slattery Auctions provided the plaintiffs with a copy of the valuation report. According to the plaintiffs, In-Fusion's primary asset is the business and the other assets of the business are not of substantial value. 8 During the period from 15 August 2016 to 29 August 2016, the plaintiffs received communications from 29 interested parties enquiring about the sale of the business. The plaintiff then sent confidentiality agreements to interested parties that had sought further information about the business; as at 31 August 2016, 19 confidentiality agreements had been executed by interested parties. On 15 August 2016, the interested parties who had executed a confidentiality agreement were provided an information memorandum which provided a summary of the business' operations and details of the assets. 9 As at 31 August 2016, the plaintiffs have received eight offers to purchase the business and assets of In-Fusion. The plaintiffs are considering the three highest offers. 10 At this point, it is appropriate to make reference to proceedings involving the Deputy Commissioner of Taxation (DCOT). On 3 August 2016, DCOT filed an application in this Court seeking an order for the winding up of In-Fusion. The hearing of that application was made returnable on 6 September 2016. On 26 August 2016, the plaintiffs sought consent from DCOT for an adjournment of the winding up application for a period of six weeks. On 30 August 2016, the plaintiffs followed up on whether DCOT would consent to an adjournment of the winding up application, and sought consent from DCOT for an extension of the convening period by 20 business days. 11 On 31 August 2016, the DCOT informed the plaintiffs that it would not oppose an application to extend the convening period by 20 business days. It was noted, however, that DCOT reserved the position in light of any additional material filed by the plaintiffs in support of such an application. At the time of today's hearing before me, DCOT had not changed the position taken.

SOME RELEVANT PRINCIPLES 12 As I observed in Parbery, in the matter of NewSat Limited (Administrators Appointed) (Receivers and Managers Appointed) [2015] FCA 435, the Court has power to extend the convening period under ss 439A(6) and 447A of the Act, but in exercising this power the Court must have regard to the objects of Pt 5.3A, which seek to maximise the chance of the company under administration or as much as possible of its business continuing in existence, or if that is not possible, to achieve a better return for the company's creditors and members than would result from an immediate liquidation. A central question is whether additional time is likely to enhance the return to creditors, particularly unsecured creditors. 13 The power to extend the time for convening the second meeting of creditors should not be exercised lightly let alone as a matter of course. But Pt 5.3A should be given a commercial construction and application which reflects the reality of the setting in which both the company under administration and the administrator find themselves. The Court must balance the expectation that administration will be a relatively speedy and summary matter against the consideration that undue speed should not be allowed to prejudice constructive commercial actions directed to maximising the return for creditors and potential return to shareholders. The perspective from which Pt 5.3A should be applied should not be narrow, and its application should not be refracted through the pessimistic lens of an insolvency technician. After all, an optimistic outcome of Pt 5.3A may be a restructuring that enables the company under administration and its activities to continue to the benefit of creditors and other stakeholders. The Court must be astute to facilitating such a potentially positive outcome where it is commercially viable. The first step in that process is usually the consideration of an application of the present type. Generally, there is usually greater upside than, downside in granting an extension for a reasonable period, where the reasonableness of the duration of the extension is contextualised by the company's and the administrator's particular circumstances. 14 The ambit and complexity of the task faced by an administrator having regard to the circumstances of the company under administration is central to whether and for what period the Court should exercise its discretion to extend the convening period. 15 An administrator is required to provide to creditors, with the notice of the second meeting, a report about the company's business, property, affairs, and financial circumstances (s 439A(4)). The administrator must also provide a statement of his opinion as to whether it would be in the creditors' interests for the company to execute a deed of company arrangement, or for the administration to end, or for the company to be wound up. That statement must also set out the administrator's reasons for that opinion and any other information which is known to the administrator and would enable the creditors to make an informed choice between available alternatives. If a deed of company arrangement is proposed, the statement must set out details of the proposed deed. In order for an administrator to carry out his functions properly, it is necessary that he should have sufficient time to investigate the affairs of the company under administration and to provide relevant commercial information and advice to the creditors. The essential issue is whether the extension is necessary to enable the administrator to arrive at an opinion so as to place creditors in the position to choose between the relevant alternatives. 16 Generally, where there is evidence of complexity in the administration of a company's or a corporate group's affairs, there is no room for any predisposition against extension. 17 The well accepted factors that may justify an extension (adopting but adapting Austin J's analysis in Re Riviera Group Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (2009) 72 ACSR 352 at [13] as recently distilled by Edelman J in Stimpson, in the matter of Eagle Boys Dial-A-Pizza Australia Pty Ltd (Administrators Appointed) v Eagle Boys Dial-A-Pizza Australia Pty Ltd (Administrators Appointed) [2016] FCA 935 at [8] to [10]) include the following: (a) whether there is a lack of timely access to the company's financial or other business records; (b) the level of co-operation of the company's officers or employees in providing relevant and timely information to the administrator to facilitate his investigations; (c) the size and scope of the business of the company or the corporate group; (d) whether the company or corporate group has substantial international activities; (e) whether there are a large number of employees with complex statutory and other entitlements relating to rights of redundancy payments, annual leave, long service leave and the like and issues relating to priority entitlements particularly under the potential liquidation option (s 556) or the deed of company arrangement option (s 444DA); (f) whether one is dealing with a complex corporate group structure including inter-company loans; (g) whether there have been complex transactions entered into by the company or the corporate group; (h) the number in quantity, value and type (secured and unsecured) of the creditors and the level of complexity in any securitisation or subordination arrangements; (i) the time needed to effect an orderly process for the disposal of assets in a manner sufficient to maximise the return to creditors, including whether any extension would maximise the chances of the sale of the relevant business as a going concern; (j) the time needed for a thorough assessment of any proposed deed of company arrangement to enable the company to trade out or to restructure; (k) if receivers have been appointed over the company's assets or undertaking (or part thereof), any additional complexity involved in the timing and relationship of such receivers' activities as it affects the administration and the options available; (l) if a corporate group is involved, the investigation of the desirability or appropriateness of "pooling" assets and creditors' claims; (m) if a corporate group is involved, the investigation of the desirability or appropriateness of one or more deeds of company arrangement; (n) whether there are any unusual substantial transactions that are potentially voidable under ss 588FA to 588FJ of the Act which warrant further investigation in order for the administrator to properly advise creditors concerning the advantages of liquidation and any potential recovery or other action; (o) whether further investigations need to be carried out concerning potential insolvent trading and the advantages of liquidation in the context of ss 588M and 588R to 588T of the Act; and (p) whether further investigations need to be carried out concerning transactions entered into to defeat employee entitlements and the advantages of liquidation to employee creditors given the operation of ss 596AA to 596AH of the Act. 18 If an extension conforms to or is consistent with the statutory object(s) stipulated in s 435A and is not inconsistent with the interests of creditors, then where a substantial issue arises in any one or more of these categories, an extension is readily justified.

SHOULD AN EXTENSION BE GRANTED? 19 The extension sought is appropriate for the following reasons. 20 First, the extension will facilitate the sale of the business as a going concern, and will maximise the potential value thereof. 21 Second, the extension will enable the second creditors' meeting to take place at the most optimal time for the provision of adequate information to creditors to enable them to make an informed choice from the then options available, particularly as they will be informed in all likelihood on the outcome of the sale process. 22 Third, and relatedly, the extension will avoid the prospect of a premature decision being made on a particular option. 23 Fourth, the extension will facilitate the ongoing employment of personnel involved in the operation of the business. 24 Fifth, the largest unsecured creditor, DCOT does not oppose the extension. 25 Sixth, it cannot reasonably be said that there is any prejudice to the creditors or any other interested person flowing from the grant of the extension. 26 Seventh, and generally, the administrators' statutory functions and duties under s 439A(4) will not be adequately discharged absent the grant of the extension. 27 I will grant orders in the terms sought. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach.